Market news

11 August 2022
  • 05:25

    EUR/USD now faces resistance at 1.0400 – UOB

    FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggest further upside could lift EUR/USD to the 1.0400 hurdle.

    Key Quotes

    24-hour view: “EUR lifted off during NY session and rocketed to 1.0368 before coming back down to close at 1.0297 (+0.84%). The strong surge appears to be overdone and EUR is unlikely to advance further. For today, EUR is more likely to trade sideways between 1.0260 and 1.0350.”

    Next 1-3 weeks: “After trading within a 1.0100/1.0300 range for a few weeks, EUR lifted off and cracked 1.0300 during NY session (high has been 1.0368). Further EUR strength appears likely even though overbought shorter-term conditions suggest a slower pace of advance. The next resistance level of note is at 1.0400. On the downside, a break of 1.0230 (‘strong support’ level) would indicate that the current rapid build-up in upward momentum has fizzled out.”

  • 05:16

    Steel price struggles to cheer softer US inflation on China concerns

    • Steel prices remains pressured as softer US dollar couldn’t impress buyers amid concerns over China, costing at home.
    • Increased prices of coke, easing production strain also weigh on the metal prices.
    • Headlines surrounding China, US consumer sentiment will be important for fresh impulse.

    Steel price reverses the post US inflation gains as traders fail to cheer softer US dollar amid fears of more output and higher costs, as well as a lack of demand, during early Thursday morning in Europe. That said, the construction steel rebar on the Shanghai Futures Exchange (SFE) slipped 0.1% while the hot-rolled coil gained 0.1%. Further, stainless steel rose 0.9% by the press time.

    Given the recently mixed performance of steel traders, Reuters said, “Steel mills have restarted some of their idled blast furnaces in recent days, encouraged by improved margins and a pickup in demand from the construction sector.”

    The news analysis also mentioned that the medium-term demand outlook for steel products and ingredients remains clouded by several issues, such as mandatory steel output cuts in China aimed at curbing emissions, a financial crisis engulfing Chinese property developers and COVID-19 lockdowns.

    Elsewhere, the mixed comments from the Fed policymakers join the China-linked news surrounding the Sino-American trade war, covid and Taiwan, to weigh on the market sentiment and the steel prices.

    Recently, Mary Daly, President of the San Francisco Fed hesitated to declare victory over inflation, even after the US Consumer Price Index (CPI) declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior. In doing so, the policymakers joined the likes of Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans. Previously, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    Talking about China-related news, Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair. Furthermore, China Customs’ latest rejection of US meat from a specific producer and comments from the Taiwan Foreign Ministry, suggest rejection of China’s motto of 'One country, Two systems’.

    Looking forward, US Jobless Claims and the monthly Producer Price Index (PPI) for July. Furthermore, Friday’s preliminary readings of the US Michigan Consumer Sentiment Index for August will also be important for fresh impulse.

  • 04:57

    USD/CAD Price Analysis: Corrective pullback seeks validation from 1.2800

    • USD/CAD prints mild gains as it consolidates the biggest daily fall in two-months.
    • Six-week-old support line, 200-DMA challenged bears but 100-DMA guards recovery moves.
    • Sluggish MACD, RSI (14) fail to support recovery moves from the lowest levels since early June.

    USD/CAD grinds higher around the daily top as it pares the biggest daily slump since June near 1.2790 during early Thursday morning in Europe.

    In doing so, the Loonie pair extends the previous day’s rebound from the convergence of the 200-DMA and a downward sloping support line from late June, around 1.2745-50. However, the 100-DMA challenges the quote’s immediate upside near the 1.2800 threshold.

    It’s worth noting that the sluggish RSI and MACD fail to entertain the USD/CAD pair’s latest corrective pullback as it bounces off a two-month low.

    Even if the quote crosses the 1.2800 immediate resistance, the monthly peak of 1.2985 and the 1.3000 round figure could challenge the buyers.

    On the contrary, pullback remains elusive until the USD/CAD prices remain beyond 1.2745-50 support confluence.

    Following that, the 61.8% Fibonacci retracement of April-July upside, near 1.2715, can entertain the pair sellers.

    It’s worth noting, however, that the USD/CAD weakness past 1.2745 could drag it to the upward sloping support line from April 05, close to 1.2630 by the press time.

    USD/CAD: Daily chart

    Trend: Further weakness expected

     

  • 04:54

    USD/JPY establishes above 133.00 as focus shifts to US Michigan CSI

    • USD/JPY is auctioning in a balanced profile above 133.00 as DXY extends recovery.
    • A downward US CPI will result in a trimmed extent of hawkish guidance by the Fed.
    • An ongoing Japan cabinet re-shuffle will keep the yen bulls on the tenterhooks.

    The USD/JPY pair has extended its recovery and has managed to sustain above the critical hurdle of 133.00 in the Asian session. The asset has elevated its pullback move after nosediving to near 132.00 on Wednesday. The further journey is likely to remain critical as more upside would require sufficient strength from the greenback bulls.

    The asset shifted into a negative trajectory after the US Consumer Price Index (CPI) tumbled to 8.5% from the prior release of 9.1%. Exhaustion signs in the price pressures after remaining a headache for the Federal Reserve (Fed) cheered the market participants. While the US dollar index (DXY) faced immense heat from the market participants.

    No doubt, a lower release of US inflation has cooled off volatility in the global market and has trimmed the odds of extremely hawkish guidance by the Federal Reserve (Fed). However, the odds of a rate hike are still intact as the road to reaching a 2% inflation rate is far from over. Therefore, the US dollar index (DXY) has extended its recovery in the Asian session after a pullback move from a six-week low of 104.64.

    On the Tokyo front, the ongoing cabinet re-shuffle is expected to result in a dramatic change in the situation of the Japanese yen on a broader basis. Finance Minister Shunichi Suzuki said that Japan’s financial position is still severe. He added that “it's critical to continue reacting to covid and inflation.”

    In the remaining week, the US Michigan Consumer Sentiment Index (CSI) will hog the limelight. The sentiment data is expected to improve to 52.2 from the prior release of 51.5. This may strengthen the DXY as higher consumer confidence in the US economy will accelerate the overall demand.

     

     

  • 04:36

    GBP/USD pares US inflation-led gains near 1.2200, UK ministers’ meeting with energy firms, GDP eyed

    • GBP/USD keeps pullback from one-week high, holds lower grounds near daily lows.
    • US dollar retreats as Fedspeak fails to praise inflation miss, China-linked news favor safe haven demand.
    • UK ministers will meet major energy firms amid talks of tightening 25% levy on North Sea oil and gas operators.
    • US Jobless Claims, PPI will also be important for intraday directions.

    GBP/USD remains pressured around 1.2200 heading into Thursday’s London open, having witnessed the biggest daily jump in two months the previous day.

    That said, the US dollar’s weakness post-inflation release pleased the Cable pair buyers on Wednesday. However, the quote’s latest weakness could be linked to the mixed comments from the Fed policymakers and the cautious mood ahead of the key meeting between the UK ministers and energy companies. Also teasing the bears are the China-linked news surrounding the Sino-American trade war, covid and Taiwan.

    “Government ministers are to meet energy companies on Thursday as the Treasury considers toughening the 25% levy on the profits of North Sea oil and gas operators announced in May,” Said The Guardian. The news also adds, “Chancellor Nadhim Zahawi and business secretary Kwasi Kwarteng will meet energy bosses to discuss soaring energy bills for households, at a time when oil and gas companies are raking in billions of pounds in profits.”

    Elsewhere, Mary Daly, President of the San Francisco Fed recently hesitated to declare victory over inflation, even after the US Consumer Price Index (CPI) declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior. In doing so, the policymakers joined the likes of Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans. Previously, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    Talking about China-related news, Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair. Furthermore, China Customs’ latest rejection of US meat from a specific producer and comments from the Taiwan Foreign Ministry, suggest rejection of China’s motto of 'One country, Two systems’.

    Amid these plays, S&P 500 Futures print mild gains near 4,220 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day.

    Looking forward, the outcome of the British Ministers’ meeting with energy firms will be important for the GBP/USD traders. Also crucial to track are the details surrounding the US Jobless Claims and the monthly Producer Price Index (PPI) for July. Furthermore, UK’s Q2 Gross Domestic Product (GDP) up for publishing on Friday, will also be important to watch for fresh impulse.

    Technical analysis

    A downward sloping trend line from June 16 restricts immediate GBP/USD upside around 1.2270. However, bears need validation from the 21-DMA support surrounding 1.2070 to retake control. That said, RSI (14) and MACD signals keep buyers hopeful.

     

  • 04:21

    Asian Stock Market: Softer US Inflation infuses adrenaline rush, oil soars

    • Asian equities have soared while Nikkei225 has pathways and has eased 0.65%.
    • Signs of exhaustion in the inflation rate have cheered the risk-perceived assets.
    • Oil prices have surpassed $90.00 despite a buildup of oil inventories last week.

    Markets in the Asian domain have jumped sharply as investors’ risk appetite has improved dramatically after a soft landing of the US Consumer Price Index (CPI) on Wednesday. US equities remained upbeat after the US Bureau of Labor Statistics reported the plain-vanilla inflation rate at 8.5% on an annual basis, lower than the already downward consensus of 8.7%. While the core CPI that doesn’t inculcate volatile food and oil prices remained unchanged at 5.9%.

    At the press time, China A50 surged 1.40%, Hang Seng jumped 1.90%, Nifty50 gained 0.80% while Japan’s Nikkei225 surrendered 0.65%.

    The market participants were cautious as the Federal Reserve (Fed) was expected to remain harsh on interest rates after the release of the upbeat US Nonfarm Payrolls (NFP). Well, hawkish bets are still not down as the Fed has a long way to go to reach the neutral rate. But signs of exhaustion in the runaway inflation have cheered the risk-sensitive currencies.

    Meanwhile, the US dollar index (DXY) is facing barricades around 105.40 and a downside move could resume as the lower inflation rate has not only trimmed the odds of prolonged hawkish guidance but has also trimmed recession fears.

    On the oil front, oil prices have crossed the psychological resistance of $90.00 swiftly as recession fears have trimmed. This could be merely a pullback move as the Energy Information Administration (EIA) reported a decent buildup of oil inventories last week. The EIA oil stockpiles landed higher at 5.458 million barrels than the prior release of 4.467 million barrels.

     

     

     

     

     

     

  • 04:16

    Fed's Daly: We don’t want to declare victory on inflation coming down

    “Mary Daly, President of the San Francisco Fed, did not rule out a third consecutive 0.75 percentage point rate rise at the central bank’s next policy meeting in September, although she signalled her initial support for the Fed to slow the pace of its interest rate increases,” said the Financial Times (FT) while quoting the latest interview with the policymaker.

    Key quotes (From Financial Times)

    There’s good news on the month-to-month data that consumers and business are getting some relief, but inflation remains far too high and not near our price stability goal.

    Still, ‘core’ prices — which strip out volatile items such as energy and food — climbed higher, led by an uptick in services inflation that Daly said showed little sign of moderating.

    This is why we don’t want to declare victory on inflation coming down.

    We’re not near done yet.

    There is a lot of uncertainty, so leaping ahead with great confidence that [a 0.75 percentage point rate rise] is what we need and being prescriptive would not be optimal policy.

    We have a lot of work to do. I just don’t want to do it so reactively that we find ourselves spoiling the labor market.

    If we tip the economy over and [people] lose jobs, then we haven’t really made them better off.

    What we need is not a good report on inflation. It’s encouraging, but it’s not evidence of the goal we really want.

    Instead, Daly is looking for the data in the aggregate to affirm the Fed is ‘on a path to bring inflation down substantially and achieve our price stability target’.

    FX implications

    The news joins the previously hawkish comments from Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans to challenge the market’s mood.

    Also read: S&P 500 Futures cheer US inflation miss but yields stay sluggish on Fed, China concerns

  • 03:56

    AUD/USD ignores strong options market signals to grind lower past 0.7100

    AUD/USD remains pressured towards 0.7050 amid early Thursday morning in Europe. The Aussie pair’s latest weakness could be linked to the US dollar’s consolidation of the US inflation-led slump. In doing so, the AUD/USD prices ignore the heavily optimistic signals marked by the options market.

    That said, the one-month risk reversal (RR) of the AUD/USD jumped the most since early June 2022 on the daily basis, while flashing 0.190 figures at the latest. It should be noted that the Aussie RR, the difference between the call options and the put options, also rose for the sixth consecutive day by the end of Wednesday’s North American session.

    On the same line, the weekly RR braces for the biggest positive readings in nearly three months while flashing the 0.370 mark by the press time.

    It’s worth observing that Australia’s downbeat prints of Consumer Inflation Expectations for August, to 5.9% from 6.3%, also exert downside pressure on the AUD/USD prices.

    Also read: AUD/USD skids to near 0.7070 as Aussie Consumer Inflation Expectations slip to 5.9%

  • 03:45

    USD/INR Price Analysis: Indian rupee buyers stay hopeful below 79.60 hurdle

    • USD/INR pares the biggest daily loss in four months around weekly low.
    • Key SMAs, two-week-old resistance line challenge buyers amid bearish MACD signals.
    • Weekly horizontal support holds the gate for bear’s entry.

    USD/INR picks up bids to 79.22 as traders lick their wounds after the biggest daily fall since early April. Even so, the Indian rupee (INR) pair remains below the key short-term key resistances during early Thursday morning in Europe.

    That said, the 50% Fibonacci retracement of the July 27 to August 02 downturn, around 79.30, appears the immediate hurdle for the USD/INR buyers to cross before challenging the 200-SMA level near 79.40.

    It should be noted, however, that a convergence of the 200-SMA and 61.8% Fibonacci retracement level around 79.52 appears a strong resistance to watch.

    If the quote rises past 79.52, a downward sloping trend line from July 28, near 79.60, acts as the last defense of the USD/INR bears.

    On the contrary, the one-week-old horizontal support area surrounding the 79.00 threshold could restrict the immediate downside of the Indian rupee pair. Following that, the monthly low of 78.40 should return to the charts.

    In a case where the USD/INR bears keep reins past 78.40, the odds of witnessing the 78.00 round figure back on the screen can’t be ruled out.

    USD/INR: Four-hour chart

    Trend: Limited recovery expected

     

  • 03:44

    EUR/USD corrects below 1.0300 as DXY strengthens ahead of US Michigan CSI

    • EUR/USD has tumbled to near 1.2850 amid a significant recovery in the DXY.
    • A lower US CPI print has trimmed the odds of hawkish guidance while rate hike odds are solid.
    • This week, the US Michigan CSI data will be of utmost importance.

    The EUR/USD pair has declined gradually to near 1.2850 after surrendering the round-level support of 1.0300 in the Asian session. Earlier, the asset printed a fresh monthly high of 1.0369 after the US dollar index nosedived on the lower print of the US Consumer Price Index (CPI).

    The plain-vanilla US CPI released lower at 8.5% than the estimates of 8.7% and the prior release of 9.1%. No doubt, a lower release of US inflation has cooled off volatility in the global market and has trimmed the odds of extremely hawkish guidance by the Federal Reserve (Fed). However, the odds of a rate hike are still intact as the road to reaching 2% inflation rate is far from over. Therefore, the US dollar index (DXY) has extended its recovery in the Asian session after a pullback move from a six-week low of 104.64.

    Going forward, investors will keep an eye on the US Michigan Consumer Sentiment Index (CSI) data, which is due on Friday. As per the market consensus, the sentiment data is seen higher at 52.2 from its prior release of 51.5. A consecutive improvement is expected in the confidence of consumers after the data slipped to 50 for the first time in the past 20 years.

    On the Eurozone front, an unchanged German inflation data at 8.5% despite a meaningful plunge in the oil prices have created havoc for the European Central Bank (ECB). A road to bring inflation down is getting trickier for the ECB as hiking interest rates is not easy due to debt-burden countries in the Eurozone.

     

     

     

     

     

  • 03:11

    Gold Price Forecast: XAU/USD slips below $1,790 as DXY extends recovery, Michigan CSI eyed

    • Gold price has slipped to near $1,785.00 as the DXY has advanced above 105.00.
    • The precious metal has shifted into a healthy correction phase.
    • A little higher consensus for Michigan CSI has supported the DXY bulls.

    Gold price (XAU/USD) has dropped to near $1,785.00 after surrendering the critical support of $1,788.00 in the Asian session. The precious metal has entered into a healthy correction phase after printing a fresh monthly high at $1,807.96 on Wednesday.

    Investors are trimming their gold positions after realizing that the lower US Consumer Price Index (CPI) for a single month can trim the hawkish guidance by the Federal Reserve (Fed) but cannot shrug off the odds of a rate hike in September. To be noted, the plain-vanilla US CPI landed at 8.5%, lower than the forecasts and the prior release of 8.7% and 9.1% respectively.

    Meanwhile, the US dollar index (DXY) has extended its recovery after a confident pullback move and has reached to near 105.40. Now, the market participants are shifting their focus toward the US Michigan Consumer Sentiment Index (CSI), which is due on Friday. The sentiment data is expected to improve to 52.2 from the prior release of 51.5. A consecutive improvement is expected in the confidence of consumers after the data slipped to 50 for the first time in the past 20 years.

    Gold technical analysis

    Gold price has surrendered the cushion of the lower portion of the Rising Channel at $1,788.00, formed on the four-hour scale. The upper portion of the above-mentioned chart pattern is placed from July 22 high at $1,739.37 while the lower portion is plotted from July 27 low at $1,711.55.

    A golden cross, represented by the 50-and 200-period Exponential Moving Averages (EMAs) at $1,768.90 adds to the upside filters.

    While the Relative Strength Index (RSI) has shifted into the 40.00-60.00 range pertaining to a mild correction but is likely o find support at 40.00

    Gold four-hour chart

     

  • 03:00

    South Korea Money Supply Growth below expectations (8.4%) in June: Actual (7.5%)

  • 02:30

    Commodities. Daily history for Wednesday, August 10, 2022

    Raw materials Closed Change, %
    Silver 20.591 0.38
    Gold 1791.95 -0.12
    Palladium 2236.9 0.98
  • 02:25

    S&P 500 Futures cheer US inflation miss but yields stay sluggish on Fed, China concerns

    • Market sentiment remains cautiously optimistic amid fears surrounding Fed’s aggression, China.
    • Fedspeak appears mixed despite softer US CPI for July.
    • Biden’s rethink on China tariff, covid case increase in Mainland China weigh on sentiment.
    • S&P 500 Futures print mild gains, US 10-year Treasury yields remain sluggish.

    Risk appetite remains unclear during early Thursday, after the US inflation numbers triggered the market’s optimism. The reason could be linked to the latest comments from the Fed policymakers, as well as headlines surrounding China and coronavirus.

    While portraying the mood, S&P 500 Futures print mild gains near 4,120 after Wall Street rallied. Further, the US Treasury yields remained mostly unchanged near the previous day’s closing around 2.79%. That said, the WTI crude oil grinds higher past $91.00, up 0.10% intraday, whereas the US Dollar Index (DXY) gains 0.14% to 105.40 at the latest.

    Market sentiment improved after US Consumer Price Index (CPI) declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior. “Traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option,” mentioned Reuters after the US inflation data release.

    Also supporting the optimism in the US markets were comments from US President Joe Biden who said, “Seeing some signs that inflation may be moderating,” as reported by Reuters. "We could face additional headwinds in the months ahead," Biden added. "We still have work to do but we're on track," adds US President Biden.

    However, comments from Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans challenged the risk-on mood. That said, Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    On the same line were the headlines surrounding China that also underpinned the latest rebound in the US dollar. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair.

    Given the market’s mixed performance, the traders should wait for weekly readings of the US Jobless Claims and the monthly Producer Price Index (PPI) for July for fresh impulse. Also important will be the risk catalysts and Friday’s preliminary readings of the Michigan Consumer Sentiment Index for August.

  • 02:08

    US Dollar Index rebound approaches 105.60 previous support on Fed, China chatters

    • US Dollar Index pares the biggest daily loss in five month, grinds higher around intraday top of late.
    • Fed policymakers hesitate in cheering downbeat US inflation.
    • Biden’s rethink on China tariffs, covid woes in the Dragon Nation challenge risk-on mood.
    • US PPI, Jobless Claims could entertain intraday traders.

    US Dollar Index (DXY) consolidate the biggest daily loss since early March during the mid-Asian session on Thursday. In doing so, the greenback’s gauge versus six major currencies takes clues from the mixed Fedspeak and fears surrounding China to reverse the US inflation-led losses, as well as refresh the intraday high near 105.40 at the latest.

    The US Consumer Price Index (CPI) declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior. After the data, Reuters mentioned that traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option.

    On the same line was US President Joe Biden who said, “Seeing some signs that inflation may be moderating,” as reported by Reuters. "We could face additional headwinds in the months ahead," Biden added. "We still have work to do but we're on track," adds US President Biden.

    The Wall Street benchmarks rallied after the inflation miss but the US Treasury yields couldn’t cheer the softer CPI. The reason could be linked to the comments from Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans. Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    Furthermore, headlines surrounding China also underpinned the latest rebound in the US dollar. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair.

    Against this backdrop, US 10-year Treasury yields rebound to 2.79% whereas the S&P 500 Futures print mild gains around 4,130 by the press time.

    Moving on, DXY traders should pay attention to the weekly readings of the US Jobless Claims and the monthly Producer Price Index (PPI) for July for fresh impulse. Also important will be the risk catalysts and Friday’s preliminary readings of the Michigan Consumer Sentiment Index for August.

    Technical analysis

    US Dollar Index holds onto the previous day’s downside break of the ascending trend line from late March, as well as the 50-DMA, despite the latest corrective pullback from a six-week low.

    Even if the DXY crosses the 50-DMA and the previous support line, respectively around 105.55 and 105.65, the bulls need validation from the 21-DMA hurdle surrounding 106.45 to retake control.

    On the contrary, bears could aim for the 38.2% Fibonacci retracement level of the DXY’s run-up from late March to mid-July, around 104.85.

    It’s worth noting that the bearish MACD and steady RSI (14) join the latest breakdown of the key supports, now resistances, to keep sellers hopeful.

    US Dollar Index: Daily chart

    Trend: Further weakness expected

     

  • 01:52

    GBP/USD Price Analysis: Bears could be about to make their moves

    • GBP/USD bears are making their moves and a correction could be on the cards. 
    • Weekly resistance is a compelling feature across the time frames. 

    GBP/USD bulls are tiring following the overnight rally that was sparked by a miss in US Consumer Price Index. There are complications for the bulls at this point as they run into weekly resistance and there is a reversion pattern left behind on the daily chart that followed Wednesday's rally. The following illustrate the prospects of a move to the downside for the day ahead.

    GBP/USD weekly chart

    The weekly M-formation's neckline has been hit and the price could well start to feel a bout of strong supply at this juncture.

    GBP/USD daily chart

    The daily W-formation is compelling as the bears move in at resistance and eye the neckline of the pattern.

    GBP/USD H1 scenarios

    The price is moving to the downside following a strong rally to the upside on the back of the US inflation data. The Fibonaccis are in view for a move to mitigate the price imbalance to the downside that the rally has left behind on the hourly chart. 

    The price has left behind an imbalance to the upside on the hourly chart that could be mitigated prior to the next significant move lower. 

    On the other hand, the price could well just fall through a low volume area if the session lows are broken in the coming hours. 

  • 01:44

    USD/CAD pares US inflation-led losses below 1.2800 despite firmer oil prices

    • USD/CAD bounces off two-month low as US dollar licks post-inflation wounds.
    • Headlines surrounding China, Fedspeak favors DXY’s corrective pullback.
    • WTI crude oil grinds higher ahead of OPEC, IEA demand forecasts.
    • US PPI, risk catalysts could entertain traders amid a light calendar.

    USD/CAD picks up bids to refresh intraday high near 1.2785 as traders lick US inflation-led wounds at a two-month low during Thursday’s Asian session. In doing so, the quote justifies the US dollar’s recent rebound, amid doubts over the Fed’s next move and China-linked headlines, while ignoring upbeat prices of Canada’s main export item WTI crude oil.

    The Loonie pair slumped the most since early June the previous day after the US Consumer Price Index (CPI) declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior. “After Wednesday's CPI report, traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option,” said Reuters following the data.

    US President Joe Biden also cheered the US CPI miss while saying, “Seeing some signs that inflation may be moderating,” as reported by Reuters. "We could face additional headwinds in the months ahead," Biden added. "We still have work to do but we're on track," adds US President Biden.

    However, Minneapolis Fed President Neel Kashkari and Chicago Fed President Charles Evans raised doubts about the latest easing of hawkish Fed bets. Fed’s Kashkari mentioned that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Further, Fed policymaker Evens stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    In addition to the Fedspeak, headlines surrounding China also underpinned the latest rebound in the US dollar. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in the mainland on August 10 versus 444 a day earlier, also weighs on the pair.

    Against this backdrop, S&P 500 Futures print mild gains near 4,120 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day. That said, the WTI crude oil grinds higher past $91.00, up 0.10% intraday, whereas the US Dollar Index (DXY) gains 0.14% to 105.40 at the latest.

    Looking forward, the weekly readings of the US Jobless Claims and the monthly Producer Price Index (PPI) for July could entertain the gold traders. However, major attention should be given to the qualitative factors in the wake of recent risk-negative headlines. Also important will be the monthly oil demand forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

    Technical analysis

    USD/CAD recovery aims for the 100-DMA level surrounding 1.2800. However, the previous resistance line from early June, around 1.2820 by the press time, challenges the bull’s return. On the contrary, fresh selling remains doubtful until the quote stays beyond the 200-DMA support, near 1.2745 at the latest.

     

  • 01:22

    AUD/USD skids to near 0.7070 as Aussie Consumer Inflation Expectations slip to 5.9%

    • AUD/USD has slipped to near 0.7070 amid a downward shift in Aussie inflation expectations data.
    • The Aussie inflation guidance data has landed at 5.9%, lower than the prior release of 6.3%.
    • A meaningful decline in US CPI may trim Fed’s hawkish guidance.

    The AUD/USD pair has dropped to near 0.7070 as the University of Melbourne has released the Aussie Consumer Inflation expectations lower at 5.9%. Earlier, the long-term inflation data landed at 6.3%. A slippage in aussie Consumer Inflation Expectations, which presents the consumer expectations of future inflation during the next 12 months will force a decline in the guidance by the Reserve Bank of Australia (RBA).

    Considering the plain-vanilla aussie inflation, which landed at 6.1%, recorded the highest since 1990, for the second quarter of CY2022, higher than the prior release of 5.1% indicates that the price pressures are still far from over. However, the exhaustion signal should be cherished.

    To contain the inflation mess, the Reserve Bank of Australia (RBA) has already elevated its Official Cash Rate (OCR) to 1.85% after three consecutive 50 basis points (bps) interest rate hike announcements.

    Meanwhile, the US dollar index (DXY) is displaying a lackluster performance in the Asian session. The DXY is sticking to its prior day’s closing price but is likely to re-visit its six-week low at 104.64 recorded on Wednesday. The downside shift in the US Consumer Price Index (CPI) forced the market participants to dump the DXY.

    The plain-vanilla US inflation landed at 8.5%, lower than the expectations and the prior release of 8.7% and 9.1% on an annual basis. A decent drop in the inflation rate on an annual basis led by a serious fall in oil prices in July has displayed a meaningful exhaustion signal to the market participants. No doubt, more rate hikes will be announced by the Federal Reserve (Fed), however, the long-term hawkish guidance will witness a serious dent.

     

     

     

     

     

     

  • 01:17

    USD/CNY fix: 6.7324 vs. las close 6.7245

    In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.7324 vs. the last close of 6.7245.

    About the fix

    China maintains strict control of the yuan’s rate on the mainland.

    The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

    Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

  • 01:17

    AUD/JPY retreats to 94.00 on softer Australia Consumer Inflation Expectations, concerns over China

    • AUD/JPY reverses the previous day’s gains amid cautious optimism, downbeat Aussie data.
    • Australia Consumer Inflation Expectations eased to 5.9% from 6.3% in August.
    • US tariff chatters, covid fears in China test buyers despite US inflation-led market optimism.
    • Yields, risk catalysts are important for clear directions amid a light calendar.

    AUD/JPY holds lower grounds near the intraday low surrounding 94.00 after Australia’s Consumer Inflation Expectations eased during August. In addition to the Aussie data, challenges to the sentiment also exert downside pressure on the cross currency pair.

    The latest release of Australia Consumer Inflation Expectations dropped to 5.9% in August, versus 6.3% prior. The Aussie data tracks the US Consumer Price Index (CPI) that declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior, which in turn joins the latest economic fears signalled by the Reserve Bank of Australia (RBA) to challenge AUD/JPY bulls.

    On the other hand, fears surrounding Australia’s largest customer China also weigh on the AUD/JPY prices. Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response. Additionally, a jump in the coronavirus cases from China, to 700 new confirmed cases in mainland on August 10 versus 444 a day earlier, also weigh on the pair.

    Amid these plays, S&P 500 Futures print mild gains near 4,120 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day.

    Moving on, a light calendar requires AUD/JPY traders to concentrate on the risk catalysts, mainly surrounding China, for fresh impulse.

    Technical analysis

    Despite the latest pullback, AUD/JPY sellers need to break the 50-DMA support surrounding 93.85 to retake control. On the contrary, an upside break of the latest peak of 94.42 should lure bulls.

     

  • 01:15

    Australia Consumer Inflation Expectations: 5.9% (August) vs previous 6.3%

  • 00:56

    EUR/USD Price Analysis: Pullback remains elusive beyond 1.0280 resistance-turned-support

    • EUR/USD remains indecisive after retreating from five-week high.
    • Monthly horizontal line challenges pullback from 50% Fibonacci retracement of June-July downside.
    • Buyers have a comparatively smoother road to journey than the one signaled for bear’s return.

    EUR/USD treads water around 1.0300, after refreshing the monthly high, during Thursday’s initial Tokyo session. In doing so, the major currency pair struggles to extend the previous pullback from the 50% Fibonacci retracement of a downturn between June and July.

    That said, bullish MACD signals and the quote’s sustained trading beyond the previous horizontal resistance line from early July, around 1.0280, keep EUR/USD buyers hopeful.

    Even if the quote drops below 1.0280, the 200-SMA and a downward sloping trend line from early June, respectively near 1.0230 and 1.0205, could challenge the pair sellers.

    It’s worth noting that a four-week-long support line of around 1.0180 acts as the last defense for the EUR/USD buyers.

    Meanwhile, the pair’s fresh run-up could aim for the aforementioned key Fibonacci retracement level near 1.0365.

    Following that, a run-up towards the 61.8% Fibonacci retracement and the late June swing high, surrounding 1.0460 and 1.0490 in that order, could lure the EUR/USD bulls.

    Overall, EUR/USD is likely to remain on the bull’s radar until staying beyond 1.0180.

    EUR/USD: Four-hour chart

    Trend: Further upside expected

     

  • 00:52

    China covid cases are back in focus, surging and cities go into lockdown

    China's islands and cities are battling COVID-19 outbreaks yet again. By the start of the week, there were at least nine cities and towns, with a combined population of about 7 million, said their residents must not leave where they live except for necessary reasons such as COVID tests, grocery shopping or essential job roles. They also suspended public transport services.

    In recent trade, it has been reported that China's Sanya's cases are surging and the city of Yiwu has moved into lockdown. Meanwhile, China's capital Beijing and financial hub Shanghai reported zero new cases, local government data showed earlier this week. The southern technology hub of Shenzhen also recorded no new infections.

     

     

     

  • 00:30

    EUR/GBP finds barricades around 0.8440 as UK GDP hogs limelight

    • EUR/GBP has slipped lower after facing selling pressure around 0.8440.
    • An unchanged German HICP at 8.5% has weakened the shared currency bulls.
    • The US GDP is expected to remain vulnerable ahead.

    The EUR/GBP pair has faced hurdles around the critical resistance of 0.8440 in the early Tokyo session. Earlier, the cross displayed a pullback move after a sheer downside to near 0.8420. The asset plunged on Wednesday after declining below the critical support of 0.8440 as the German Harmonized Index of Consumer Prices (HICP) remained unchanged at 8.5%. Also, the German inflation landed in line with the estimates.

    It is worth noting that the US economy also reported the inflation rate, which tumbled sharply due to weak oil prices. The impact of weak oil prices should also be reflected in German inflation too. This indicates that the ongoing energy crisis in Germany after Russia blocked the major pipeline of gas to Europe shrugged off the impact of lower oil prices.

    And, the market participants dumped the shared currency bulls. Well, the multiplier effects of the same will be faced by the European Central Bank (ECB) and their job of containing the inflation mess will get trickier.

    On the UK front, the market participants are expecting a shrink in Gross Domestic Product (GDP) in the second quarter by 0.2% against the expansion of 0.3%. Also, the UK economy is expected to shrink by 1.3% against the expansion of 0.5% on a monthly basis. Adding to that, the estimate for annual GDP is 2.8%, significantly lower than the prior print of 8.7%.

    Adding to that, an underperformance is also expected on the Manufacturing production front. The annual data is likely to slip lower to 1.3% vs. the prior release of 2.3%. Whereas, Industrial Production could display an uptick to 1.6% from 1.4% annually.

     

     

     

     

  • 00:30

    Stocks. Daily history for Wednesday, August 10, 2022

    Index Change, points Closed Change, %
    NIKKEI 225 -180.63 27819.33 -0.65
    Hang Seng -392.6 19610.84 -1.96
    KOSPI -22.58 2480.88 -0.9
    ASX 200 -37.1 6992.7 -0.53
    FTSE 100 18.91 7507.11 0.25
    DAX 165.96 13700.93 1.23
    CAC 40 33.44 6523.44 0.52
    Dow Jones 535.1 33309.51 1.63
    S&P 500 87.77 4210.24 2.13
    NASDAQ Composite 360.88 12854.8 2.89
  • 00:28

    Gold Price Forecast: XAU/USD eases below $1,804 hurdle as Fed hawks retreat on softer US inflation

    • Gold price remains sidelined around one-month high, traders flirt with previous resistance.
    • Fedspeak, US-China chatters join 61.8% Fibonacci retracement level to challenge XAU/USD bulls.
    • Risk catalysts will be important, US PPI, Jobless Claims can entertain traders.

    Gold price (XAU/USD) fades US inflation-led gains as the metal retreats to $1,790 during the initial Tokyo session on Thursday. The precious metal’s latest weakness could be linked to the mixed concerns surrounding the US Federal Reserve’s (Fed) next moves and the Sino-American tension.

    On Wednesday, the US Consumer Price Index (CPI), declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior.  Following the US inflation release, US President Joe Biden said on Wednesday that they are seeing some signs that inflation may be moderating, as reported by Reuters. "We could face additional headwinds in the months ahead," Biden added. "We still have work to do but we're on track," adds US President Biden.

    “After Wednesday's CPI report, traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option,” said Reuters following the data.

    On the contrary, Minneapolis Fed President Neel Kashkari recently mentioned, “The Fed is ‘far, far away from declaring victory’ on inflation.” The policymaker also added that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Elsewhere, Chicago Fed President Charles Evans stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    Additionally, Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response, which in turn challenged the XAU/USD bulls.

    Against this backdrop, S&P 500 Futures print mild gains near 4,120 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day.

    Moving on, the weekly readings of the US Jobless Claims and the monthly Producer Price Index (PPI) for July could entertain the gold traders. However, major attention should be given to the qualitative factors in the wake of recent risk-negative headlines.

    Technical analysis

    Gold price remains pressured towards the previous resistance line from mid-June, after failing to cross the 61.8% Fibonacci retracement of the June-July downturn.

    However, higher-low on the XAU/USD prices gain support from the same pattern of the RSI (14), which in turn portrays the bullish divergence and keeps the metal buyers hopeful.

    It’s worth noting that, the commodity’s downside break of the resistance-turned-support, near $1,788, isn’t a call to the gold sellers as a three-week-old ascending support line and the 50-SMA, respectively near $1,783 and $1,777, could challenge the quote’s further weakness.

    Alternatively, recovery moves need validation from the 61.8% Fibonacci retracement level surrounding $1,804.

    Following that, a run-up towards the mid-June swing high near $1,858 can’t be ruled out.

    Gold: Four-hour chart

    Trend: Further upside expected

     

  • 00:22

    NZD/USD Price Analysis: Bears moving in for the low hanging fruit

    • NZD/USD bears could be about to move in.
    • The 0.6350s is vulnerable to a restest in the coming sessions.

    NZD/USD is stacking up for a downside correction with 0.6350 eyed as a potential support area that could be met should the bulls continue to throw in the towel following Wednesday's surge related to the US CPI data. 

    NZD/USD daily chart

    The price is stalling on the bid and a downside correction could be on the cards for the days ahead. 

    NZD/USD H1 chart

    The price needs to get below the volumes seen around 0.6380/90 and in doing so, it will be moving in on the 38.2% Fibonacci retracement level. If this were to give, then there will be prospects of a 50% mean revision of the hourly bullish impulse. Below there, 61.8% and 78.6% will come into focus that guards a run to the neckline of the daily chart's W pattern around 0.6280/6315.

  • 00:15

    Currencies. Daily history for Wednesday, August 10, 2022

    Pare Closed Change, %
    AUDUSD 0.70786 1.66
    EURJPY 136.849 -0.83
    EURUSD 1.0299 0.84
    GBPJPY 162.294 -0.49
    GBPUSD 1.22152 1.18
    NZDUSD 0.63957 1.74
    USDCAD 1.27737 -0.85
    USDCHF 0.94256 -1.16
    USDJPY 132.883 -1.63
  • 00:10

    US Dollar Index aims to recapture 104.60 as odds of Fed’s hawkish guidance trim

    • Downside momentum is indicating that the DXY will re-visit its six-week low at 104.64.
    • The odds of a Fed rate hike will remain steady while the hawkish guidance will trim abruptly.
    • A meaningful decline in the US CPI has underpinned risk-sensitive assets.

    The US dollar index (DXY) witnessed an intense sell-off on Wednesday after a downward shift in the US Consumer Price Index (CPI). The DXY fell like a house of cards as a significant slowdown in the price pressures trimmed the odds of a bumper rate hike by the Federal Reserve (Fed) in its September monetary policy meeting. A downside break of the consolidation formed in a 106.00-106.80 range dragged the asset towards 104.64. A pullback move has been observed, however, the downside will remain intact.

    Plain-Vanilla CPI skids 60 bps

    The plain-vanilla US inflation landed at 8.5%, lower than the expectations and the prior release of 8.7% and 9.1% on an annual basis. A decent drop in the inflation rate on an annual basis led by a serious fall in oil prices in July has displayed a meaningful exhaustion signal to the market participants. No doubt, more rate hikes will be announced by the Federal Reserve (Fed), however, the long-term hawkish guidance will witness a serious dent.

    Risk-on market mood to remain for a while

    After a series of policy tightening measures by the Fed through raising interest rates and concluding the bond-purchase program, a sigh of relief is taken by Fed policymakers. A month with upbeat employment data and a significant drop in the price pressures is what investors were eyeing for the past few months to push liquidity into the risk-perceives assets. Going forward, the risk-on impulse will remain active for a tad longer period.

     

     

     

  • 00:05

    US inflation expectations refresh monthly low near 2.43% after CPI release

    US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped to the lowest levels in two weeks after the US Bureau of Labor Statistics released downbeat figures of the US Consumer Price Index (CPI) for July on Wednesday.

    That said, the inflation precursor dropped to 2.43% by the end of Wednesday’s North American session.

    Following the US inflation release, US President Joe Biden said on Wednesday that they are seeing some signs that inflation may be moderating, as reported by Reuters. "We could face additional headwinds in the months ahead," Biden added. "We still have work to do but we're on track," adds US President Biden.

    “After Wednesday's CPI report, traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option,” said Reuters.

    However, Minneapolis Fed President Neel Kashkari mentioned, “The Fed is ‘far, far away from declaring victory’ on inflation. The policymaker also added that he hasn't ‘seen anything that changes’ the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Elsewhere, Chicago Fed President Charles Evans mentioned, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

    FX implications

    Markets remain cautiously optimistic following the latest reduction in the US CPI, as well as the slump in inflation expectations. That said, S&P 500 Futures print mild gains near 4,120 by the press time.

11 August 2022
Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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